Microsoft accused of bribery in Hungary

The Wall Street Journal reports that Microsoft is being investigated by the U.S. Justice Department and the Securities and Exchange Commission for allegedly being involved in a bribery and corruption scheme in Hungary involving the sale of software to the government.

The incident of interest appears to be a deal before 2014 where Microsoft is accused of selling software at a discount to middlemen, who then marked up the software to full price and sold the licenses to the Hungarian government. The profit made would then be passed on to government officials, presumably those involved in making purchasing decisions.

Bribing officials overseas is a crime in USA under the 1977 Foreign Corrupt Practices Act (FCPA).

There does appear to be some fire to the smoke, as Microsoft said they fired 4 employees including Microsoft Hungary country manager, Istvan Papp after a 2014 internal investigation. Microsoft also stopped working with 4 companies in the country due to what they called “policy violations.”

For his part, Istvan Papp said he had “received only positive feedback from the management,” but declined to expand further.

Microsoft has been probed for similar practices in the past involving deals in China, Italy, and Romania, and Pakistan and Russia, though the outcomes of these investigations were unknown.

The impact of being found guilty can be significant – in 2017 Telia, a Swedish telecom company settled for $965 million following a case involving its subsidiary in Uzbekistan.